Archives for March 2015

XX in Health is an initiative of digital health venture fund Rock Health that aims “to help move our industry closer to gender equality.” The group, in partnership with Disruptive Women, held its sixth annual women’s retreat today at the Harvard Club of New York, bringing together female leaders from across the country, and the world, for an inspiring day of discussions and workshops. Speakers included Barbara Bush, Co-Founder and CEO, Global Health Corps; Bridget Duffy, MD, CMO, Vocera; Ted Eytan, MD, MS, MPH, Medical Director, Kaiser Permanente Center for Total Health; and Sarah Kliff, Senior Editor, Vox. Below is a sampling of takeaways shared by attendees at the invitation-only event:

Can we afford to continue “business as usual” after every successive outbreak of an infectious disease or should we determinedly move to correct the deep systemic flaws in our preparedness and our response? Developing an objective “outside in” global health security strategy for the future requires establishing enabling frameworks: from raising money to conveying resources and services to affected populations; establishing policies and protocols that enable the developing of innovative products, programs, and pathways; and ultimately understanding and sharing risks, liabilities, and responsibilities to pre-empt, combat, and contain infections.

Some good has emerged: Unlike multiple sources offering confounding communications in the early months of the outbreak, WHO and CDC agree on and cross reference the facts. But as panelists at a session I chaired at Davos this year stated: communications, coordination, and logistics – unless overtly addressed – will continue to pose a challenge. If we learn from this Ebola experience and act upon it, we will at least move to make vulnerable populations more secure in the future….

There is no shortage of ideas on the use of funds – but limited agreement on how programs will be executed and pervasive lack of clarity on the cost of programs and the source of funds. This results in “on again, and off again” programs. Keeping the world safe in the future requires viewing infectious disease as a chronic threat for the foreseeable future, and establishing both a proactive approach to “curb and contain,” and a reactive one that builds sustainable capabilities and processes to facilitate rapid and timely response….

The Upshot column in today’s New York Times focuses on the efforts of Dr. Rushika Fernandopulle and the team at Iora Health to scale primary care medicine services nationally. The article, “Company Thinks It Has Answer for Lower Health Costs: Customer Service,” details the Iora Health mission to improve quality of care and reduce costs by focusing on prevention and using a personalized, team-based approach. In an earlier post, we covered Iora’s impact on patient satisfaction and clinical outcomes. Below is an excerpt from the New York Times article on getting to scale – a challenge faced by many innovative healthcare startups:

[A Seattle practice] is one of five that Iora Health opened in just a few months last year. The company now has 140 employees in 11 practices, and it plans to open at least 10 more in 2015. It just raised $28 million in its third round of venture capital financing to help it expand. The ultimate goal is hundreds of practices across the country, a kind of Starbucks for health care. (The company recruited one executive whose last job was opening Au Bon Pain franchises.)

Dr. Rushika Fernandopulle, who is one of the company’s founders and serves as its chief executive, said: “Building one good practice is mildly interesting, because a few people have done that. But how do you scale that across the country? That’s much harder.”

There is plenty of innovation in health care delivery, and Dr. Fernandopulle is far from the only physician who thinks he has a better idea about how to keep patients healthier for less money.

But his idea is intriguing because it offers the possibility of mass replication of quality care, which might affect the way medicine is practiced beyond his company. Few health care innovators now expand beyond their original location. A team of Stanford researchers recently looked around the country to find what they considered to be the very best primary care practices: All 11 had either one location or just a handful of sites.

“Most doctors have no business skills, and they don’t understand what venture investors and private investors do,” said Dr. Arnold Milstein, a professor of medicine and an author of the study, who directs the Stanford Clinical Excellence Research Center.

Dr. Fernandopulle’s goal is to “transform health care.” And his strategy is to take something small and effective and reproduce it in office after office. But as Professor Milstein points out, running one unconventional practice and keeping it great is very different from running 100….

If scale in customer service businesses is difficult, then national scale in primary care medicine is unprecedented in the United States. Dr. Fernandopulle is confident, but he also knows the next few years will be telling.

“You don’t learn about this reading about it or talking about it in conferences,” he said. “You learn this by doing it.”

Dave Chase, the founder of Avado and an Oliver Wyman Health Innovation Center advisory board member, argues in a new LinkedIn blog post that smart mayors and economic development directors will stake their claim to be the place where healthcare gets reinvented, positioning their communities to take advantage of a trillion dollars of annual revenue that will move from one set of players to another in the coming 10 years. Forward-looking city leaders, he writes, are realizing this opportunity is too important to leave up to the incumbent healthcare players in their community. In the following excerpt, Chase warns that healthcare incumbents run the risk of going the way of the newspaper industry unless they commit to decisive action:

The examples below are a “shadow” healthcare system that is rapidly developing. As with newspapers, it’s not a frontal assault but a slow chipping away of chunks of what has been delivered by traditional healthcare providers. While health systems dawdle, their lunch is being eaten by an array of new entrants reminiscent of what happened to newspapers.

Direct Primary Care providers: Another innovative new model that is two parts Marcus Welby and one part Steve Jobs is poised to explode as venture firms and health plans are investing in organizations such as Iora Health and Qliance while DaVita is making a major bet with their Paladina Health division.

Retail clinics such as Minute Clinic and ZoomCare are filling an unmet need and are rapidly growing. They have grown to over 10 million visits in under a decade by filling an unmet need. Organizations such as CVS, Walgreen’s, Target, and Walmart are also getting their pharmacists out from behind their counter to more actively get involved in medication management that is so vital to managing chronic conditions.

Domestic medical tourism:Walmart joined Lowes and Pepsico in creating a national market for surgical procedures. Now every hospital in the country is effectively in competition with the Mayo Clinic, Cleveland Clinic, Virginia Mason, and other top facilities who provide fixed fee procedures with outstanding outcomes. Add to this the movement to transparent pricing on surgeries and it chips away at some of the most lucrative, non-emergent procedures a hospital delivers. See DIY Health Reform Reduces Surgery Costs 50-90% for more.

Medicare Advantage programs: WellPoint bought CareMore for $800 million and DaVita bought Healthcare Partners for $4.4 billion as they have clarity on the future of healthcare. As you can read, CareMore and Healthcare Partners have had remarkable results — much of it at the expense of slow-moving hospitals.

I have seen this “movie” before and the ending isn’t pretty, yet it’s entirely avoidable with decisive action. The final chapter written by many newspaper executives was a disaster. Newspaper executives oversaw the demise of one of the major institutions of their cities and are a pale shadow of their former self. Health system executives run the risk of repeating this story if they continue to sit back and play defense.

A recent study published by the Journal of the American Medical Association suggests that the Patient-Centered Medical Home (PCMH) model can not only boost cancer screening rates overall but, in particular, can help reach lower socioeconomic groups. The study included more than 2,000 Michigan primary care practices in the Blue Cross Blue Shield of Michigan (BCBSM) Physician Group Incentive Program, which rewards member groups for adopting a patient-centered, team-based approach to care. In an editor’s note, Dr. Mitchell Katz wrote: “It is heartening to see that a key intervention in health reform – the creation of patient-centered medical homes – may finally help us narrow the gaps in our healthcare system that exist across socioeconomic status.” Below we share key learnings and next steps from Dr. Michael Paustian, a study author and BCBSM Health Care Manager for Clinical Epidemiology & Biostatistics:

What prompted your interest in this research? The reasons for conducting this research are multi-faceted. There is increasingly a need to look at screening rates by race or for socioeconomically disadvantaged populations to inform outreach, and in conjunction with the BCBSM social mission. Practices located in socioeconomically disadvantaged areas often have greater opportunities for improvement in screening rates that are used in accreditation, but these practices are providing care to patient populations that face challenges – from transportation problems to lower literacy rates and difficulty paying for services – that larger well-funded practices typically don’t. So we wanted to see whether the effects of PCMH were uniform across practice environments, or whether the model has differing benefits based on where it is implemented.

What surprised you during the process and in the results? I’m not sure we were surprised by the findings that the effects on cancer screening rates are different by socioeconomic context, but perhaps a bit surprised about the magnitude of the differences in the effects. That the disparities in cancer screening rates between high and low socioeconomic practices could essentially be cut in half through successful adoption of the PCMH model provides a glimmer of hope that we may finally have an intervention capable not just of improving population health but also reducing health disparities.

The disparities in cancer screening rates between high and low socioeconomic practices could essentially be cut in half through successful adoption of the PCMH model. – Dr. Michael Paustian, Blue Cross Blue Shield of Michigan

A recent post reviewed why some Accountable Care Organizations (ACOs) have failed to generate anticipated cost savings, while others are moving forward. Here, Oliver Wyman’s Tomas Mikuckis provides some specific examples of partnerships that demonstrate how to strategically navigate from a fee-for-service to a value-based market:

In recent weeks, a number of interesting success stories have been highlighted in various publications. Taken together, they show that delivering value can’t be achieved through a one-size-fits-all prescription. The examples highlight the importance of capitalizing on the often unique advantages of given local markets to create traction and momentum. Here’s a cross-country roundup of role models for success on value:

Massachusetts: Blue Cross Blue Shield of Massachusetts (BCBSMA) has expressed a commitment to driving cost and quality improvement through value-based arrangements. The Blue Cross Alternative Quality Contract (AQC) rewards doctors and hospitals for higher quality and better outcomes. In 2014, independent researchers examined the first four years of the AQC and found that it has lowered costs and improved patient care for HMO Blue members. A recent Avalere Health report concluded that “models like the AQC could serve as potential building blocks for collaborations that align incentives across providers and several payers” and “as backbones for pilots that engage the Medicare program and other government payers, with the potential to transform healthcare delivery and spending.” Part of BCBSMA’s advantage has been a very highly organized physician market with lots of employment and infrastructure in place, enabling providers to take risk and be successful. While BCBSMA’s announced intentions to expand the program beyond its HMO business to more open-access PPO networks isn’t yet a guaranteed slam-dunk, as some observers have noted, the effort to do so will benefit from a strong foundation laid with a high degree of provider buy-in and engagement.

Michigan: Blue Cross Blue Shield of Michigan faced a very different landscape, with a more fragmented and less developed physician landscape. BCBSM embarked on a multi-year investment to develop what is now among the nation’s largest Patient-Centered Medical Home programs. The program achieved certified savings of $155 million in prevented ER and hospital claims from the first three years of the PCMH designation program. Data from 2013-2014 shows adult patients in Blue-designated PCMH practices had a 27.5 percent lower rate of hospital stays for certain conditions than non-designated practices, and a 9.9 percent lower rate of ER visits over non-PCMH doctors. The investment in the PCMH model appears to be paying outsized dividends as well, evident in both the rapid introduction of hospital value-based contracts in that market over the past two years and a number of unique ACO-based product partnerships that have been launched in the state. More on the BCBSM PCMH and others can be found in the Patient-Centered Primary Care Collaborative’s annual review here.

The examples highlight the importance of capitalizing on the often unique advantages of given local markets to create traction and momentum. – Oliver Wyman’s Tomas Mikuckis

Confronted with tighter profit margins and greater risks, executives are under more pressure than ever to deliver higher returns from their business portfolios. In Oliver Wyman’s Risk Journal Vol. 4, health services advisor Dan Lyons joined with colleagues in the financial services and energy sectors to explain why many standard investment opportunity assessment tools are proving to be flawed. The below excerpt, from their article “The Missing Links in Investment Analysis,” delves into the challenges of non-financial risks facing health plans:

Health plans will be unable to allocate capital effectively unless they take a proactive approach to understanding the non-financial risks they face. Non-financial risks have dramatically altered the healthcare industry’s economics, especially over the past five years. Regulatory risk introduced by healthcare reform in the United States has made it challenging for health plans to formulate strategies.

At the same time, new forms of healthcare delivery and disruptive consumer business models such as HealthKit, Apple’s new app that enables users to keep track of their personal health and fitness data, will likely transform the ways in which people think about their health and well-being in the future.

The impact of healthcare reform is already starting to take its toll on the profitability of health plans. Due to regulatory oversight over pricing, product commoditization, and the introduction of consumer choice through healthcare exchanges, revenues are depressed at the same time that margins are being squeezed by rising medical costs.

As a result, health plans are faced with two choices: They must either diversify their business models and seek new sources of profitability or prepare for consolidation and roll-ups. Examples of new diversified “big plays” include developing new consumer health engagement technologies, reimagining consumer health and well-being experience models, and starting care delivery enablement businesses.

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Transforming Healthcare is the official blog of Oliver Wyman's Health & Life Sciences practice, offering ideas from OW's global team of experts as well as the latest in trend-bending market news from across the web.